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Investment Schemes Hope on Airtel Listing, Umeme Contract Closure :: Uganda Radionetwork
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Investment Schemes Hope on Airtel Listing, Umeme Contract Closure

Airtel is expected to go public as set out in the National Telecommunications Operator's license which was granted in 2020, providing for listing at least 20 per cent of its shares. The other top operator, MTN-Uganda went public with an Initial Public Offer in 2021.

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Collective investment schemes are looking forward to a possible windfall later this year from the expected listing of Airtel Uganda on the stock market, as well as attractive Umeme Ltd shares.  

Airtel is expected to go public as set out in the National Telecommunications Operator's license which was granted in 2020, providing for listing at least 20 per cent of its shares. The other top operator, MTN-Uganda went public with an Initial Public Offer in 2021. 

Speaking at the Annual General Meeting of UAP Old Mutual Unit Trust, Board Chairman Samuel Sejjaaka said Airtel's Initial Public Offer, expected this year, is reigniting the confidence of the investors in the stock market. He added that they will take advantage of the current turmoil in the Kenyan market where some investors have exited.

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UAP is undergoing a rebranding process to Mutual Investment Group following the acquisition of UAP Insurance by Old Mutual. The unit trusts and other collective investment managers invest most of their funds in stock markets or equities, as well as government securities like treasury bonds and bills which are considered largely risk-free relative to other assets.

Last year, the Uganda stock market recorded a slight decline in its total market value as some stocks on the Uganda Securities Exchange underperformed, especially those cross-listed from the Nairobi Stock Exchange.

However, Sejjaaka says there are a few that continue to perform well, adding that currently, Umeme Ltd is the shining star as investors rush in anticipation of the expected government payout in case its power distribution concession is not renewed.

In case it's not renewed, Sejjaaka also assures investors that the value of their shares will be protected by a plan that's under discussion to ensure that they will not fall below a certain value. He was explaining the possible effects on the investments by the current dynamics in the economy including a high inflation rate.

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The financial sector continued to experience turbulence in 2020 that featured high local and global inflation, high-interest rates, harsh climatic conditions as well as the relocation of resources by offshore investors. Despite this, however, the sector, including unit trusts in Uganda posted high growth rates, according to Sejjaaka.

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In 2022, the UAP fund size grew 77 per cent to 1.098 trillion Shillings in Assets Under Management, from the 615 billion registered in 2021. The Umbrella fund, which refers to the pool of retirement investment schemes by different employers, continued to dominate the UAP unit trust with a total of 1.089 trillion Shillings.

The company offered a return on investment of between 11.07 and 11.63 per cent, depending on the investment type, which UAP said was good as it was above the high inflation rate experienced over the year.

John Golooba, the Chief Finance Officer says they will continue ensuring that they keep most of the money invested in assets within Uganda so that the people's investments and savings benefit the country more.

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Sejjaaka noted that 2022 marked a year of macro deviations and global uncertainties, though Uganda's economic growth rate rebounded to 4.6 per cent, a significant increase from 3.5 per cent in the previous period.

Despite the challenges posed by the Russia-Ukraine crisis, global supply chain disruptions, elevated commodity prices, and adverse weather patterns, "the industry weathered the storm and emerged stronger," he said.

He hopes that since Uganda is an agro-based economy, the sector will keep watching the effects of climate change, as well as global politics.

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Simon Mwebaze, the Managing Director called on the government to continue staying application of taxes on the savings of the Ugandans.

Last financial year, the government communicated to the industry of an introduction of a 15 per cent tax on the interest of holders of more than 100 million shillings, and 5 per cent for those with less than 100 million. However, following an uproar, it was stayed.

Mwebaze also urges the industry players to handle the investments in a way that justifies the tax exemption on them.

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